Momentum growing for Marcellus Shale

mcarroll@centredaily.comFebruary 9, 2013 

Ed Agostinelli sees a not-too-distant future where natural gas powers the trucks that take children to school, deliver goods, haul trash and salt roads.

And Agostinelli’s State College-based company, Seraph Energy, is behind the push to make it a reality sooner, not later.

Seraph is ready to convert fleets of existing truck engines from diesel fuel burners to users of cleaner — and according to Agostinelli — cheaper natural gas.

Thanks in part to the Marcellus Shale boom, the natural gas he hopes soon will power the country’s trucks is more plentiful and more affordable than ever.

“My phone has been ringing off the hook,” Agostinelli said.

It’s an exciting time for local companies with innovative ideas about how to take advantage of the Marcellus Shale play.

“Momentum is growing,” said Bill Hall, executive director of the Ben Franklin Shale Gas Innovation and Commercialization Center, based in State College.

“Basically, it’s very likely Centre County could set the pace for natural gas vehicle conversion and utilization,” Hall said.

The center is part of a statewide initiative to establish a collaborative to accelerate technology breakthroughs related to the shale gas in Pennsylvania.

And Centre County is leading the way. Last year, two collaborations between Penn State and local companies won the center’s shale gas innovation contest.

The contest was designed to “identify, support and commercialize technologies and early-stage businesses that enhance responsible stewardship of the environment while properly utilizing this trans- formative energy asset,” according to the center.

One business won for developing a lightweight, leak-proof mat system designed to contain drilling mud and fracking fluid produced during the gas drilling process.

Another team took home a prize for creating a system for retrofitting diesel trucks to run on compressed natural gas.

Hall said converting trucks from diesel to natural gas could be the wave of the future, as projections for the next 20 years show natural gas prices should remain low.

“That leads to a greater need of innovation,” he said. “We have a lot of gas. We have to find ways to get it out of the ground and make money doing it. It pushes the need for innovation.”

That’s where companies such as Seraph come in. While it might not yet be cost- effective for the average person to convert the family car, companies that operate heavy equipment and trucks daily are starting to take note.

“When it comes to their diesel engines, they use more than 10,000 gallons a year,” Agostinelli said. “At $4.60 a gallon (for diesel), it starts to get your attention.”

According to Agostinelli, certain trucks that drive 60,000 miles per year and replace 10,000 to 15,000 gallons of diesel with domestically produced natural gas, can save $20,000 to $30,000 on fuel prices annually.

Those savings quickly add up, paying for the engine conversion in about a year, he said.

“You can see if a company burns 12,000 gallons a year, they have just saved a tremendous amount of money,” Agostinelli said.

“Everyone is on small margins.”

Seraph is working with California-based Omnitek Engineering on the converted diesel engines. The companies, however, must get federal Environmental Protection Agency approval for each specific engine model they convert.

“For the first engine we got approval for, there are 1.3 million in the United States,” Agostinelli said. “If you got a fraction of 1 percent (to convert) that’s big business.”

And it would mean jobs for the area.

“The overhaul of an engine will take man- hours,” he said. “Each engine will probably take 100 man-hours. It’s going to employ a lot of people everywhere. There will be a lot of hiring.”

One challenge is bringing in more fueling stations to supplement the one already in place in State College.

Trucking companies may be waiting to make the switch until there are more fueling options, and station owners may be waiting until there is more business.

“It’s like the chicken or the egg,” Agostinelli said.

But according to Hall, one local fuel company, Christoff Mitchell Petroleum, is ready to move in, finalizing plans to build filling stations in State College and DuBois.

“The model is apparently successful — go out and get five companies that commit to some amount of gas, take a little risk and it works,” Hall said.

Hall said innovations also are in the works that could make filling family vehicles at home much more affordable than running those same sedans and minivans on traditional gasoline.

One project would eliminate a step in the con- version of gas pressure to make the fuel vehicle- ready. Gas is compressed at about 50 pounds per square inch in the area’s pipelines, and must be converted first to 500 to 800 psi and then to about 3,600 psi to power a vehicle. Companies are currently working to eliminate that last step.

Hall said another developer is working on a home-refilling station that could cost as little as $200. He speculated gas companies could give them away for free as an incentive to get people to switch.

Converting a family vehicle costs about $7,000, and a home filling station will set someone back an additional $10,000. But with these new innovations, the price for the equivalent of a gallon of gasoline might be as low as 60 cents, Hall said.

“That’s going to change things considerably,” he said.

Activity slowed, expansion sought

There have been 64 Marcellus Shale wells drilled in Centre County, but only two in 2012. And there are only four active drilling permits in the county.

“Activity has essentially slowed,” said Bob Jacobs, director of the Centre County Planning Office.

Jacobs said boosts to traffic, local businesses and the housing market, all seen in the Marcellus Shale boom, have “subsided quite a bit” in Centre County.

But there has been a positive secondary impact among businesses and other groups looking to create innovative products or otherwise seeking to capitalize on the large supply of shale in the state.

The Central Pennsylvania Institute of Science and Technology, for ex- ample, is taking advantage by offering more opportunities for its students looking to get involved in the natural gas industry.

The technology school is building a new facility to help train truck drivers, in great demand where drilling and fracking is more prominent.

The school’s $10 million, 35,000-square-foot Transportation Training Center will serve both high school and post-high school students.

“It’s not only driving trucks, but repairing engines, teaching technicians to work on compressed natural gas vehicles,” Jacobs said.

County officials, meanwhile, are looking to develop partnerships that could lead to better local infrastructure for shipping gas to market and to homes and businesses looking to take advantage of lower heating costs.

“We want to talk about the average person on the street,” said Commissioner Chris Exarchos. “How can we help, what can we do to make natural gas available to them? That would be a phenomenal economic boost to the county. If the average home spends $3,000 in fuel oil, if you cut that in half, that’s $1,500 in someone’s pocket.”

But to make natural gas heating available to more people in the county, officials will have to get creative and work with private industry, Exarchos said.

“Because we are rural, we don’t have the infrastructure to make it available throughout the county,” he said. “It’s not unlike what happened with electricity. It’s the same problem that’s facing natural gas.”

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